Who says the rich don't want to pay for professionals who can improve the quality of their life? Asks Kees Stoute
Last week, I met up with a friend, a successful 53-year old entrepreneur, whom I had not seen for quite a while.
Part of our conversation went something like this:
- Friend (F): “I have just decided to work with a wealth manager. For EUR 30,000 per annum he will help me to get and keep my entire financial picture clear; a complete financial health check.”
- Me (M): “What made you come to the conclusion that you need such a service?”
- F: “Actually, I don’t really need it, but the wealth manager seems like a good and trustworthy guy. He made me feel quite comfortable to try his service.”
- M: “Still, which of your concerns do you think will be addressed? If you have no concerns at all, there really is no rationale for spending such money.”
I had decided for myself that I wanted to understand exactly which concerns he had, to lead him to the decision to involve the professional.
After a while, it appeared that there were, actually, a number of concerns:
- He wants to invest his money, but does not know which investment return he should aim to achieve (“How to determine?”).
- He is confident that he has more than enough money to support him and his partner for the rest of their lives, but he nonetheless does not know how much they really need to comfortably live the life they want to live.
- He has no idea how much he would leave behind if he and his partner live until, for example, age 85. “If it concerns a significant amount, I would rather start to think now about how to organise, structure and be involved in my legacy.”
- He realises that if, unexpectedly, something were to happen to him, his partner would inherit “an incredible financial mess” (in his words).
- He does not feel comfortable at all in terms of understanding whether he has structured his private and business assets smartly enough.
- He has a mortgage on his house and is not sure what is the best approach: keep the mortgage or fully repay it?
- Although he loves to play the stock market, he does not feel at all comfortable managing his entire portfolio.
- He is not confident that he has the right – and sufficient – insurance policies.
- He is not confident that he has structured his wealth in the most tax-efficient way.
I am not sure that if we had continued this conversation a bit longer, whether more concerns would surface, but one conclusion became clear: this friend of mine is happy to pay this fee, because he knows that – if done well – the service will improve the quality of his life.
He is prepared to pay a professional, as the expected return on this investment is a level of comfort, which is directly correlated with his ability to live happily ever after.
Contact Kees: [email protected]
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